Dogecoin price fell nearly 7% in 24 hours, and slid 6.5% to reflect a risk-off shift among crypto traders.

The spat between Musk and Trump rattled confidence, with Musk warning that the U.S. is likely headed for a technical recession this year - a concern that weighed heavily on speculative assets.

"The quarrels between Elon Musk and President Trump exposes divides that could hinder plans to reform the U.S. economy, which is why cryptocurrencies as a whole dropped overnight," said Jeff Mei, COO at BTSE, in a Telegram message to CoinDesk.

"However, we are still positive on the long-term viability of crypto markets, and given the success of Circle's IPO yesterday, it's clear that there are still many institutional investors who feel the same way," Mei added.

Some analysts pointed to the growing risk that political infighting could spill over into markets.

"While recent U.S. macroeconomic reports influenced the sell-off, the negative outlook has been mostly driven by the escalating tensions between President Trump and Elon Musk," said Nick Ruck, director at LVRG Research, told CoinDesk.

"Investors fear their feud could spill over into the markets. We remain optimistic for the long term as institutions continue to build within the greater crypto ecosystem," Ruck added.

Traders remain cautious as the market awaits clarity on the debt ceiling debate and the potential impact of Trump’s proposed “One Big Beautiful Act” on fiscal policy.